Monday, November 14, 2011

How to use environmental regulations to stifle competition

A real estate developer shows how the California Environmental Quality Act (CEQA) can be used against competitors, as the LA Times reports:

To halt a competing project near USC, Conquest Student Housing turned to a legal weapon that one of its co-owners allegedly compared to a crude bomb: cheap and destructive.

Conquest owned 17 buildings that rented to USC students. When the developer Urban Partners proposed erecting a new complex to house 1,600 students, Conquest sued under California's landmark environmental law.

It then filed similar challenges to unrelated Urban Partners projects elsewhere in the state.

That last step was apparently one too many:

Conquest withdrew its challenges only after Urban Partners filed a federal racketeering lawsuit.

For a developer, the ultimate solution to environmental regulations, of course, is to have supported the right politicians. Politicians, no matter how liberal, are happy to give you a free pass:

In September, Gov. Jerry Brown signed a law to allow a football stadium proposed for downtown Los Angeles to avoid drawn-out CEQA litigation. He signed a second bill that would allow an unspecified number of other major projects to gain the same treatment.

If environmental regulations are good, shouldn't they apply even to politically-favored projects? Apparently not. That seems to support Urban Partners contention that environmental lawsuits really are just racketeering.